Money When You Need It

Read More

There is nothing complicated about money; you either spend it or save it. Over the course of a lifetime it mostly gets spent, so saving is just money to be set aside for spending at some point in the future. This is a really important point, because in setting it aside there are two key considerations. The first is how to get the best rate of return on the money while it is being held aside, and the second is how to make sure it is available when it is required for spending. The latter consideration is what is called liquidity – that is, the ease with which an investment can be turned into cash for spending.

The shorter the investment time frame, the more liquid an investment needs to be. Liquidity, rate of return and investment risk can work against each other. Generally speaking, if you are looking for a high level of liquidity with a low level of risk, you will receive a low level of return. In the very short term, liquidity takes precedence over return.

Investment time frame is a key driver of investment strategy. The starting point for any strategy is to work out how much money you need and when. For the very short term, savings accounts are the best option. If you have a mortgage, savings can be kept in a line of credit or offset account to reduce the amount of mortgage interest you pay. If you don’t have a mortgage, use an online savings account for your emergency funds or money you plan to spend in the next year. If you are reliant on money from investments to top up your income, have a series of term deposits maturing six months apart so there is always money available when you need it.

Related Articles

Liz Koh

Budget Winners and Losers

The latest Government budget had something for everyone but while most households will be a few dollars a week better off, there are some clear winners and losers. In the winners’ corner are businesses, those on high incomes, and savers. The biggest losers are property investors who have built large portfolios financed partly by tax rebates.

Read More »

Top Up or Miss Out

The end of June is an important date for KiwiSaver members. The financial year for KiwiSaver runs from 1 July 2009 to 30 June 2010 and if you have contributed at least $1,040 to KiwiSaver during that time, you will be eligible for the full amount of Government tax credit to be paid into your KiwiSaver account in July.

Read More »

Responsible Investing

There is a worldwide trend for investors to want to make a positive contribution to the world by investing in companies that are socially and environmentally responsible. If you are passionate about the effects of climate change, the scarcity of food and water, and social or environmental policies in general, then you will no doubt wish to ensure that the companies in which you invest are going about their business in a manner that is consistent with your views.

Read More »

Helping You Live your retirement To the Max

Keep in touch

Fill in your details and we’ll get back to you in no time.